Executive Summary / Key Takeaways

• Madrigal Pharmaceuticals has successfully launched Rezdiffra, the first and only FDA-approved therapy for MASH with moderate to advanced fibrosis, generating $137.3 million in net sales in Q1 2025 and $317 million in its first 12 months, demonstrating strong market uptake.
• Rezdiffra's liver-directed THR-β agonist technology offers quantifiable benefits, including significant reductions in liver stiffness (mean 6.7 kPa in F4c patients at 2 years), supporting its positioning as a foundational therapy and providing a competitive moat.
• The company is strategically focused on expanding market penetration within the estimated 315,000 diagnosed U.S. F2-F3 MASH patients, pursuing geographic expansion into Europe (mid-2025 decision expected, Germany launch H2 2025 if approved), and seeking indication expansion into compensated cirrhosis (F4c) based on outcomes trial data expected in 2027.
• Strong progress has been made in "wiring the system," including achieving over 80% commercial payer coverage with broad acceptance of non-invasive tests, facilitating patient access and driving prescriber adoption (70% of top 6k targets prescribed by Q1 2025).
• While currently operating at a net loss ($73.2M in Q1 2025) due to significant commercial investments, Madrigal holds a solid liquidity position ($848.1M cash/equivalents/marketable securities at Q1 2025) expected to fund operations for over a year, supporting its ambitious growth plans in a rapidly evolving competitive landscape.

A New Dawn in MASH Treatment

Metabolic dysfunction-associated steatohepatitis (MASH), formerly known as NASH, represents a significant and growing global health crisis. This progressive liver disease, often linked to metabolic risk factors, can lead to severe outcomes including cirrhosis, liver failure, hepatocellular carcinoma, and premature mortality. It is projected to become the leading cause of liver transplantation in the United States, already holding that unfortunate distinction among women. Despite the clear and urgent unmet medical need, the MASH field has historically been a graveyard for drug development, marked by numerous clinical trial failures.

Into this challenging landscape stepped Madrigal Pharmaceuticals, a biopharmaceutical company singularly focused on developing novel therapeutics for MASH. Co-founded in 2011, Madrigal embarked on a journey centered around its lead candidate, resmetirom (now Rezdiffra), a liver-directed therapy designed to target the underlying causes of the disease. This journey culminated in a landmark moment for the MASH community and Madrigal: in March 2024, the U.S. Food and Drug Administration (FDA) granted accelerated approval for Rezdiffra for the treatment of adults with noncirrhotic MASH with moderate to advanced liver fibrosis (F2-F3). This approval positioned Rezdiffra as the first and only FDA-approved therapy for MASH, transforming Madrigal from a research-focused entity into a fully integrated commercial-stage organization.

The commercial launch of Rezdiffra in the U.S. in April 2024 marked the beginning of a critical phase. As a first-in-disease launch, it necessitated building market infrastructure from the ground up – a process management refers to as "wiring the system." This involves educating healthcare providers and patients, establishing efficient patient identification pathways using non-invasive tests (NITs), securing broad payer coverage, and helping physician practices integrate MASH treatment into their standard workflows. Madrigal's strategic focus is on executing this complex launch to establish Rezdiffra as the foundational therapy for the estimated 315,000 diagnosed F2-F3 MASH patients in the U.S. who are currently under the care of specialist prescribers.

Technological Edge: Targeting the Liver, Driving Outcomes

At the heart of Madrigal's investment thesis is Rezdiffra's differentiated technology: it is a once-daily, oral, liver-directed thyroid hormone receptor beta (THR-β) agonist. This mechanism is designed to specifically target the liver, which is the central organ affected by MASH, addressing key metabolic pathways involved in fat accumulation, inflammation, and fibrosis. The liver-directed nature of Rezdiffra is a key technological advantage, aiming to maximize therapeutic effect where it's needed most while potentially minimizing off-target effects.

The tangible benefits of this technology have been demonstrated in clinical trials. In the pivotal Phase 3 MAESTRO-NASH trial, Rezdiffra showed statistically significant improvements in both MASH resolution with no worsening of fibrosis and fibrosis improvement by at least one stage with no worsening of the NAFLD activity score in F2-F3 patients. Beyond these regulatory endpoints, the technology's impact on liver health is further underscored by data from the open-label compensated MASH cirrhosis (F4c) arm of the MAESTRO-NAFLD-1 trial. Two-year data from this cohort revealed a mean reduction of 6.7 kilopascals (kPa) in liver stiffness as measured by VCTE, a non-invasive test correlated with fibrosis and a strong predictor of clinical outcomes. This reduction was statistically significant compared to baseline. Furthermore, 51% of these F4c patients achieved a reduction of 25% or greater in liver stiffness, a level associated with a lower risk of progression to end-stage liver disease, suggesting a potential for significant clinical benefit, even in this advanced patient population.

For investors, this technological differentiation and the resulting quantifiable benefits are critical. They form the basis of Rezdiffra's competitive moat, supporting its premium pricing potential and driving physician confidence in its real-world effectiveness. The ability to demonstrate meaningful improvements in objective measures like liver stiffness, even in higher-risk patients, provides a strong rationale for prescribing and patient adherence, which is crucial for a chronic disease like MASH. Madrigal's ongoing Phase 3 MAESTRO-NASH OUTCOMES trial in F4c patients, expected to read out in 2027, is a direct extension of this technological focus, aiming to validate these benefits with hard clinical outcomes and potentially double the addressable market. The company's stated goal of building a pipeline beyond Rezdiffra through in-licensing or acquisition is aimed at leveraging this established leadership and potentially developing combination therapies or treatments for different MASH patient segments, further solidifying its technological position.

Launch Momentum and Financial Health

The U.S. commercial launch of Rezdiffra has demonstrated significant momentum since its April 2024 debut. In the first quarter of 2025, Madrigal reported net product revenue of $137.3 million, representing a robust 33% increase compared to the $103.3 million generated in the fourth quarter of 2024. Cumulatively, the company achieved $317 million in net sales during the first 12 months on the market, a performance management benchmarks favorably against some of the most successful specialty medicine launches of the past decade. This strong revenue growth is a direct result of increasing patient adoption and prescriber uptake.

As of the end of Q1 2025, over 17,000 patients were on Rezdiffra, a significant increase from the 11,800 patients reported at the end of Q4 2024. This metric represents patients actively on therapy, providing a rigorous measure of sustained treatment adoption. Prescriber penetration is also building steadily, with 70% of Madrigal's 6,000 top target prescribers having written a prescription for Rezdiffra by the end of Q1 2025. Across the broader target base of 14,000 specialist prescribers, approximately 50% have now prescribed the therapy. This expanding breadth and depth of prescribing reflects the impact of the company's "wiring the system" efforts, which have focused on educating physicians, streamlining the prescription process, and improving patient access.

Payer coverage has been a critical factor in this early success. Madrigal achieved its goal of securing coverage for over 80% of commercial lives by the third quarter of 2024, ahead of schedule. Importantly, over 95% of these covered lives accept non-invasive tests for diagnosis and staging, alleviating the significant barrier that a biopsy requirement would have presented. While gross-to-net discounts are expected to increase throughout 2025 as payer contracting evolves, this is considered typical for a specialty launch and is factored into the company's expectations for robust year-over-year net sales growth in 2025.

Financially, Madrigal is in a period of significant investment to support the launch and future growth. For the three months ended March 31, 2025, the company reported a net loss of $73.2 million, compared to a net loss of $147.5 million in the prior-year period (which had no product revenue). Operating expenses totaled $216.6 million in Q1 2025, including $4.5 million in cost of sales (incurred following launch), $44.2 million in R&D expenses (down from $71.2 million in Q1 2024 due to changes in inventory accounting post-approval and lower clinical trial costs), and $167.9 million in selling, general, and administrative expenses (a significant increase from $80.8 million in Q1 2024, reflecting the scale-up of commercial operations). SG&A costs are expected to rise further in 2025 with continued U.S. launch investment and preparation for European expansion.

Despite operating losses, Madrigal maintains a solid liquidity position. As of March 31, 2025, the company held $848.1 million in cash, cash equivalents, restricted cash, and marketable securities. This is a decrease from $931.3 million at the end of 2024, primarily due to funding operations. Management believes this cash position is sufficient to fund operations for over a year from the filing date of the Q1 2025 report (May 1, 2025). The company also has a $250 million loan facility with Hercules, with $115 million outstanding as of Q1 2025, and was in compliance with all covenants. An additional $135 million is available under the facility, subject to lender discretion. This financial strength provides the necessary resources to execute on the multi-year launch strategy and pursue future growth initiatives.

Strategic Expansion and Competitive Dynamics

Madrigal's strategy extends beyond the initial U.S. F2-F3 launch, focusing on three key pillars for long-term leadership: expanding penetration in the existing U.S. market, geographic expansion, and indication expansion. With only about 5% penetration into the target 315,000 diagnosed F2-F3 patients, significant runway for growth remains in the U.S. market alone.

Geographic expansion is a near-term priority. Madrigal remains on track for a mid-year 2025 regulatory decision from the European Medicines Agency (EMA). If approved, Rezdiffra would be the first MASH treatment available in Europe, and Madrigal plans to commercialize directly, beginning with a targeted country-by-country launch starting in Germany in the second half of 2025. The prevalence of MASH in Europe is similar to the U.S., and the disease is a growing driver of hepatocellular carcinoma there.

Indication expansion into compensated MASH cirrhosis (F4c) represents a significant opportunity to potentially double Rezdiffra's addressable market. Patients with F4c fibrosis face a dramatically higher risk of liver-related mortality (42 times higher than those without fibrosis). The ongoing MAESTRO-NASH OUTCOMES trial, which completed enrollment in October 2024 with 845 patients, is designed to evaluate Rezdiffra's impact on progression to liver decompensation events in this high-risk population. Positive data from this outcomes trial, expected in 2027, could support an expanded indication aligned with FDA guidance for cirrhosis studies. The promising two-year data from the MAESTRO-NAFLD-1 F4c cohort, showing significant reductions in liver stiffness, provides early support for the potential of Rezdiffra's mechanism in this population.

The competitive landscape in MASH and related metabolic diseases is evolving rapidly. While Madrigal currently holds a unique position as the only approved therapy, other players are developing candidates. Key competitors include large pharmaceutical companies like Gilead Sciences (GILD) and Novo Nordisk (NVO), as well as clinical-stage biotechs like Akero Therapeutics (AKRO) and Viking Therapeutics (VKTX). Larger companies like NVO, with their strong presence in metabolic diseases via GLP-1 agonists (e.g., semaglutide), are pursuing MASH indications. Management acknowledges that the stated efforts of the "next entrant" (likely referring to NVO) are focused on expanding the market to a much larger population than Madrigal's initial F2-F3 target.

Madrigal believes this potential market expansion driven by competitors could ultimately benefit Rezdiffra by increasing overall disease awareness, screening, and diagnosis, adding to the pool of diagnosed patients. Furthermore, Madrigal highlights Rezdiffra's differentiated profile as a liver-directed therapy and a once-daily oral pill as key advantages. While GLP-1s are used for comorbidities (approximately 25% of current Rezdiffra patients are also on a GLP-1, and about 50% have been previously exposed), Madrigal argues that patients with moderate to advanced fibrosis need a therapy specifically targeting the liver disease itself. They point to the challenges with long-term adherence and dose titration seen with other therapies (e.g., ~30% adherence for semaglutide in obesity after one year) and believe Rezdiffra's profile supports better adherence, which is critical for patients at risk of progressing to cirrhosis who "can't afford time." Madrigal is confident that its first-mover advantage, established market presence, and differentiated technology position Rezdiffra for leadership even as the competitive landscape evolves and could support combination therapy approaches.

Madrigal's financial profile reflects its stage as an early commercial company with significant R&D commitments. While its gross profit margin is high (96.67% TTM), operating and net margins are currently negative (-133.95% and -123.38% TTM, respectively) due to heavy investment in the launch and clinical trials. This contrasts with larger, profitable competitors like GILD (78% gross margin, 2% net margin TTM) and NVO (85% gross margin, 35% net margin TTM). Clinical-stage peers like AKRO and VKTX also have negative margins but lack the revenue generation seen by Madrigal. Madrigal's current ratio (5.91 TTM) and quick ratio (5.58 TTM) indicate strong short-term liquidity relative to liabilities. Its debt-to-equity ratio (0.17 TTM) is low compared to GILD (1.38 TTM) but higher than NVO (0.72 TTM) and VKTX (0.0013 TTM), reflecting its reliance on debt financing alongside equity raises. While its ROIC and ROE are negative due to unprofitability, its revenue growth trajectory from a zero base is currently unmatched by larger, more mature competitors. The company's ability to leverage its technological lead and execution to drive revenue growth will be key to improving these profitability metrics over time.

Conclusion

Madrigal Pharmaceuticals stands at a pivotal juncture, having successfully transitioned from a development-stage biotech to a commercial entity with the groundbreaking launch of Rezdiffra. As the first and only approved therapy for MASH with moderate to advanced fibrosis, Rezdiffra addresses a critical unmet need with a differentiated, liver-directed technology that has demonstrated compelling efficacy in clinical trials and promising results in real-world early use. The strong launch performance, marked by accelerating sales, growing patient numbers, and expanding prescriber adoption, underscores the urgent demand for an effective MASH treatment and validates Madrigal's commercial execution and strategy to "wire the system."

The investment thesis for Madrigal is centered on its ability to capitalize on its first-mover advantage and technological leadership to capture significant market share in the large and underserved MASH market. Strategic initiatives to expand geographically into Europe and pursue indication expansion into compensated cirrhosis offer substantial future growth drivers. While the company faces the inherent challenges of a first-in-disease launch and an evolving competitive landscape, its strong financial position provides the resources needed to navigate these complexities and invest in future growth. Continued execution on the U.S. launch, successful expansion into Europe, positive outcomes from the cirrhosis trial, and disciplined pipeline building will be critical factors determining Madrigal's long-term success and its potential to establish Rezdiffra as a blockbuster therapy and itself as the leading company in the MASH sector.